Absa Bank Beperk v Vrystaat Ontwikkelingskorporasie (3360/2005) [2005] ZAFSHC 13 (20 October 2005)

Absa Bank Beperk v Vrystaat Ontwikkelingskorporasie (3360/2005) [2005] ZAFSHC 13 (20 October 2005)

The court found that the guarantee did not contain an unconditional acknowledgment of liability by the defendant. Liability was contingent upon the occurrence of certain registrations and the guarantee not being cancelled prior to such registrations. The guarantee therefore created only potential or conditional liability, not the unconditional liability required for a liquid document. As a result, the guarantee could not serve as the basis for provisional sentence. The court declined to address whether payment had been made in terms of the guarantee, as the application for provisional sentence failed on the first issue.

Citation
[2005] ZAFSHC 13
Parties
Plaintiff: Absa Bank Beperk; Defendant: Vrystaat Ontwikkelingskorporasie
Court
Free State High Court, Bloemfontein
Jurisdiction
South Africa
Judgment Date
20 October 2005
Case Number
3360/2005
Procedural Posture
Civil Trial / Application for Provisional Sentence
Outcome
Provisional sentence refused. The summons remains as a simple summons, and the defendant is deemed to have entered an appearance to defend as of the date of judgment. Uniform court rules apply to further pleadings. The plaintiff is ordered to pay the costs of the provisional sentence application; the remaining costs...
Judges
C.H.G. van der Merwe
Legal Topics
Provisional Sentence, Liquid Document, Guarantee Interpretation
Civil Procedure Provisional Sentence Liquid Document Guarantee Interpretation

Case Brief

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Parties

Absa Bank Beperk

Plaintiff

Vrystaat Ontwikkelingskorporasie

Defendant

Procedural Posture

Civil Trial / Application for Provisional Sentence

Legal Issues

  1. 1 Whether the guarantee constitutes a liquid document for purposes of provisional sentence.
  2. 2 Whether the defendant has shown a probable defence that the guarantee was paid.

Ratio Decidendi

The court found that the guarantee did not contain an unconditional acknowledgment of liability by the defendant. Liability was contingent upon the occurrence of certain registrations and the guarantee not being cancelled prior to such registrations. The guarantee therefore created only potential or conditional liability, not the unconditional liability required for a liquid document. As a result, the guarantee could not serve as the basis for provisional sentence. The court declined to address whether payment had been made in terms of the guarantee, as the application for provisional sentence failed on the first issue.

Court Disposition

Provisional sentence refused. The summons remains as a simple summons, and the defendant is deemed to have entered an appearance to defend as of the date of judgment. Uniform court rules apply to further pleadings. The plaintiff is ordered to pay the costs of the provisional sentence application; the remaining costs...

Orders

  • Provisional sentence is refused.
  • The provisional sentence summons remains as a simple summons.